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On December 26, the Office of Management and Budget issued final guidance that makes sweeping changes to federal grants management. The "Super Circular," which streamlines requirements, supersedes eight existing OMB Circulars and concludes a two-year effort by OMB and the Council on Financial Assistance Reform (COFAR). For audit purposes, the final guidance is effective for entities with fiscal years beginning on or after December 26, 2014.

This article, the first in a four-part series, provides an overview of the new uniform guidance. The second covers administrative requirements, the third reviews changes to the cost principles, and the fourth focuses on the significant reforms to the audit requirements in Subpart F of the uniform guidance (formerly circulars A-133 and A-50).

This uniform guidance codifies the following circulars into the Code of Federal Regulations:

Administrative Requirements

  • A-102, Grants and Cooperative Agreements with State and Local Governments
  • A-110, Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations
  • A-89, Catalog of Federal Domestic Assistance

Cost Principles

  • A-21, Cost Principles for Educational Institutions
  • A-87, Cost Principles for State, Local, and Indian Tribal Governments
  • A-122, Cost Principles for Non-Profit Organizations

Audit Requirements

  • A-133, Audits of States, Local Governments, and Non-Profit Organizations
  • A-50, Audit Followup

The agency published its proposed guidance, supported by detailed comparisons, in a February 1, 2013, Federal Register notice. NACUBO submitted comments in May on the proposed guidance and also endorsed comments offered by the Council on Governmental Relations.

Administrative Requirements

As in the proposed guidance, the Super Circular uses A-110 as the basis for the consolidated guidance on administrative requirements for grants and cooperative agreements. In response to concerns of several nonprofit organizations about the administrative burden of the proposed procurement standards, OMB revised the language to require nonfederal entities to maintain "oversight" rather than a "system" to ensure that contractors perform in accordance with the terms of their agreements.

Federal agencies and pass-through entities will be required to evaluate the risk associated with a recipient before making awards. In addition, certain conditions may require a federal awarding agency to review the merit and risks associated with potential awards and impose conditions on the nonfederal entity when necessary.

Cost Principles

Direct Costs: The final guidance more clearly allows for administrative costs to be charged directly when they are specifically allocated to one award, if the entity has prior approval from the awarding agency. To allow for flexibility in implementation, this approval may be obtained after the initial budget approval.

The definition of "supplies" in the final guidance clarifies that computing devices will be classified as supplies if the acquisition cost is less than the lesser of the capitalization level established by the institution for financial statement purposes or $5,000, regardless of the length of its useful life.

Indirect Costs: Language in the uniform guidance provides that "any non-federal entity that has never had a negotiated indirect cost rate may use a de minimis rate of 10 percent of modified total direct costs." Entities with an approved federally negotiated indirect cost rate "can apply for a one-time extension without further negotiation, subject to the approval of the federal agency." The extension can last up to four years.

The final guidance also extends to all higher education institutions the provisions that allow for recovery of increased utility costs associated with research.

Cost Accounting Standards and Disclosure Statement: Currently, when institutions' awards total $25 million or more, they must comply with the Federal Acquisition Regulation (FAR) Cost Accounting Standards (CAS) and file a disclosure statement. OMB sees these requirements as crucial in mitigating waste, fraud, and abuse. Understanding that the source of burden on higher education institutions likely occurs when the institution crosses the threshold for the first time, OMB has set the new threshold at $50 million, consistent with FAR requirements.

Audit Requirements

While many commenters asked OMB to further increase the Single Audit threshold, the final guidance keeps the level at $750,000, as proposed. OMB estimates this will maintain Single Audit oversight over 99.7 percent of the federal award dollars. The types of findings reported in the Schedule of Findings and Questions Costs remained the same in the uniform guidance, although the threshold for reporting questioned costs was raised from $10,000 to $25,000.

Additionally, OMB made some changes to risk determinations and the process of distinguishing between Type A and Type B programs.

Compliance Supplement: In the end, OMB did not include changes to the compliance requirements that would appear in the compliance supplement in this final guidance. OMB had eliminated half of the requirements in the proposed guidance. Because the compliance supplement is published as part of a separate process, no changes were made in the final guidance, though a preview of the modified 2015 requirements is expected to appear in the 2014 supplement. COFAR recommended "any future changes to the compliance supplement be made based on available evidence on past findings and the potential impact of non-compliance for each type of compliance requirement." Additionally, COFAR asked OMB to conduct outreach to stakeholders before changing the format of the compliance supplement.

Resources and Training

In addition to the guidance posted in the Federal Register, OMB has posted several useful documents on its website, including:

Additionally, COFAR will offer an all-day online training session on the final guidance on January 27. Details are available on the COFAR website. Individuals should sign up to the COFAR Mailing List.  Details for the training webinar will distributed via the list.

NACUBO will provide further analysis on the uniform guidance in the coming weeks.


Liz Clark

Vice President, Policy and Research



Bryan Dickson

Director, Student Financial Services and Educational Programs


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